Here's my summary of the key news overnight in 90 seconds at 9 am, including news Barclays CEO Bob Diamond was forced to resign overnight after late night calls from the heads of the Bank of England and the Financial Services Authority to his chairman Marcus Agius that his position was untenable.
The widening LIBOR (London Interbank Offer Rate) scandal in London claimed the scalps of Diamond and his Chief Operating Officer Jerry Del Missier, along with Agius himself earlier in the week. See more here at Bloomberg.
The Bank of England itself is under fire now with Diamond threatening to expose its role. Diamond has suggested he got a nudge and a wink in 2008 from the Bank of England to lie about the interest rates Barclays was declaring in the LIBOR setting process to make Barclays appear stronger. See more here at Reuters and the FT.
Diamond oversaw the fast growing investment banking part of Barclays from 2005 to 2009 when Barclays was falsifying its LIBOR rates. The scandal threatens to spread to the worlds biggest banks with 18 other banks being investigated by authorities over claims they lied about the rates submitted in the LIBOR setting process. LIBOR is the base rate for over US$350 trillion (with a t) worth of interest rate contracts.
Meanwhile, US stocks closed up 0.6% in a July 4 holiday shortened session on growing expectations of central bank interventions in America, Europe and China to stimulate the flagging global economy. See more here at Reuters.
US investors are speculating the US Federal Reserve will unleash a third round of quantitative easing (QE III) or money printing to buy long term government bonds as early as August 1 after signs of contracting factory activity and stubbornly high unemployment in the world's largest economy.
Meanwhile, the European Central Bank is expected to cut its official rate from 1% to 0.75% on Thursday night at the same time as the Bank of England announcing a fresh round of its own QE.
Also, China's monetary authorities are expected to ease its Reserve Requirement Ratio for banks, which would free them up to lend more.
Meanwhile, the New Zealand dollar was solid near two month highs of over 80.4 USc and near record highs of 63.7 euro cents, despite news yesterday that New Zealand's commodity prices fell 2.4% in June to their lowest levels in two years. The last time our commodity prices were this low was in July 2010 when the New Zealand dollar was around 70 USc. That suggests the IMF's estimate of the New Zealand dollar being around 15% overvalued is about right.
BNZ's economists say their models show the New Zealand dollar is around 22% overvalued on a Purchasing Power Parity basis. See more here.
As if to emphasis how over-valued the New Zealand dollar is, Fonterra's fortnightly GlobalDairyTrade auction of milk powder overnight showed prices fell 5.9%. See the results here.
No chart with that title exists.